How Self-Driving Cars Will Change the Insurance Industry
BY: CHRIS BARRY ON THURSDAY, OCTOBER 01, 2015
The concept of the self-driving car is either a utopian dream or serious threat to your livelihood, depending upon the industry you are employed by and its opinion of this advance in motor vehicle technology. The presence of autonomous computerized vehicles on our roads will not only change the way we cope with traffic and interact with our fellow drivers: expect the automobile and insurance industries to be disrupted in a myriad of ways.
Legal liability – who will take the blame?
According to Brookings, a Washington-based independent research organization and policy consultancy group, the legal precedents of products liability litigation will provide manufacturers of autonomous vehicle technology with a very strong set of incentives to make their products as safe as possible. Nevertheless, there will inevitably be some accidents attributable to defects in future vehicle automation systems.
While this will raise complex new liability questions, there is no reason to expect that the legal system will be unable to resolve them. In the meantime, however, there are few if no legal precedents to guide policy-makers with respect to issues pertaining specifically to self-driving cars. In the case of an accident attributable to a car driven by a computerized program and not entirely by a human being, the legal industry may place the blame squarely on the shoulders of the creator of the software driving the car, which for many manufacturers is a cause for concern.
Google has been testing self-driving Priuses since 2011. Confirming their commitment to this new-fanged technology, the company recently announced that it will now be continuing its design of automotive prototypes through a separate business entity known as Google Auto. With this satellite company, Google hopes to protect itself from legal liability as it continues working on this new venture.
A Toyoto Prius, modified by Google to drive autonomously. Source: Wikipedia
Removing human error from the equation
With self-driving cars expected to gain serious traction within the next five to ten years, insurance industry experts have begun to take a stance on the technology’s disruptive potential. According to La Capitale Insurance, alcohol is one of the two main causes of car accidents. In 2013, 41% of deceased drivers had been drinking. Self-driving cars could prevent such tragedies, with the number of accidents on the road sharply decreasing as human error takes a backseat to artificial intelligence. This is predicted for both personal and commercial vehicles, and in certain cases can already be measured: optional safety features on many new cars and standard equipment on luxury automobiles have been linked to a decline in certain types of accidents. For instance, owners of cars with front crash prevention technology or lane-departure warnings are less likely to file accident reports with their auto insurance provider.
Accidents will still require repairs
While the self-driving automobile’s body and traditional components might require extensive repairs after an accident, it is its self-driving software systems that have analysts on edge. Should expensive and finely-tuned equipment become damaged or totally unusable, the cost of repairs may be prohibitive. This may make autonomous vehicles too expensive to insure or own for the average driver. In turn, auto accidents may become rarer but far more expensive for auto insurance companies. In another scenario, drivers may prefer to use shared transportation or avail themselves of public transport services in their community.
Should autonomous vehicles become the norm, which is highly plausible, the auto insurance industry isn’t likely to simply disappear. Instead it will be forced to adapt, with liability shifting away from car owners and onto those who program the robot brains that actually drive them.
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